Everyone talks about New Year Resolutions, but rarely do we discuss how to close out the current year. Here are 8 ways to wrap up 2011:
1. Separate all 2011 statements, bills and receipts and archive them all.
We do this with 12 manila envelopes, one for each month. Then put 'em in a box and store them where you can easily access the data if needed. You can also do this with your on-line files. If you are ever audited, the process of finding receipts and bills will become quite easy.
2. Review reports in Quickbooks or Quicken.
If you are not on a program like Quickbooks or Quicken, make it your goal for 2012 to do so. It is a powerful tool for staying on top of your net worth, budget and spending. Once all your data is inputed (and can be easily downloaded from your on-line banking) you can click on any category and find out what you really spend and what you're really making. It's a great time to compare to prior years, and see how close you are to your financial goals.
3. Create More Tax Deductions
If you want to reduce taxes for 2011, you can create deductions before the end of the year. For example, you can pay some bills early. You can also purchase good and services that qualify for write-offs. Some qualifying expenses for rental properties include: repairs, advertising for tenants, printing, insurance premiums, association memberships, seminar fees, mobile phone services, subscriptions, utilities, etc. You can also stock up on office supplies and office furniture. Consider claiming a home office or work space. Also, talk to your CPA about deducting auto expenses for real estate related activities.
4. Pay Your Kids
Consider hiring your children to help with your rental business. Then you can deduct their compensation as a business expense. They will be in a much lower tax bracket than you. The money can be used to pay for their extra-curricular activities.
5. Accelerate Depreciation Expenses
Your rental property is depreciated over 27.5 years, but the property's assets may be depreciated over a 5-year span. Property assets include: air conditioners, refrigerator, carpets, dryer, etc. Other items may be depreciated over a 15-year span, including fences, patios, sidewalks, etc. Talk to your CPA about accelerated depreciation!
6. Make a list of all your successes in 2011
Our family does this together at the end of every year. We pull out an old calendar and start making lists of all the successes and wins each of us experienced. You can also do it with your business and staff. You may be surprised at how long the list really is! Put it in a binder so you can look back at it over the years.
7. Make a list of all your challenges in 2011
What? Why would you want to remember those nasty moments? There is tremendous value in life's challenges. These are often the times we learn our greatest lessons. So write down the challenges, and next to it, write down the lessons learned. List the new qualities you developed. You may be surprised at how wise you've become!
8. Create a theme for 2011
Once you've reviewed your successes and lessons, you may see a common theme for the year. Give the year a movie-like title. "Rebirth," "Surviving the Financial Storm," "Change for the Good." are just a few ideas.
Do you have other tips or rituals for closing out the year? If so, please share them in the comments below.
Next week's blog will be on how to launch the new year. Stay tuned!
.
.
Tags: Current Events, Goals and Strategic Planning, Healthy and Wealthy Lifestyle, investing, Tax Credit, Taxes, Why Real Estate?
Kathy,
In regards to #2, in addition to Quicken the best budgeting software out there is called YNAB (You Need A Budget). Very simple because it doesn't have a lot of extra crud added in. It budgets the amount you set for a category and then rolls the surplus or overspending over to the next month. The goal is to get where you are able to eventually pay next months bills with the leftover from the previous months rather than your income for the current month. Great program. Check it out.
Thanks,
Rick